Small and Medium Enterprises (SMEs to you and me!) are the powerhouse behind the UK economy. Regular pronouncements from the Government suggest that the country’s economic future is in our hands! I have read a couple of reports recently about the impact SMEs have on the UK economy, and they set me thinking. The first announced the good news – UK SME income up 7.4% in 2014. After such a long period of economic stagnation it is good to see measured growth – I hope you see some of it coming your way! The message from the second report is not so good: One in four small companies has no business plan for growth (based on my experience, I reckon the figure is somewhat higher than this!) but maybe this cloud has a silver lining? If we are seeing 7.4% income growth in a sector where 75% of businesses have no plan for growth, more focus on planned development could represent a huge, latent opportunity. There is no doubt many businesses who openly admit to having no proper business development plan are still very successful though too often this success is built on fragile foundations. It’s great while everything is going well but the lack of a plan can lead to real problems if the unexpected happens.
A Lesson Learnt
We learnt this lesson graphically in the 1990s. We had allowed BSA to evolve without a proper plan and, as a consequence, to become over-reliant on one client. While the relationship continued the business was great-and profitable. We just rode the wave! Suddenly there was a change of senior management and a change of policy meant that services they had been successfully subcontracting (to us!) would be brought in house. We hadn’t done anything wrong, the client was very happy with us, it was just a change of policy. These things happen! Within 3 months, our turnover with the client had dropped to almost zero – now that was a wake-up call! Fortunately we survived the ordeal and learnt our lesson. We mustn’t allow circumstances to creep up on us – we needed a plan-and now we have one!
Why do companies take the risk?
One of the reasons that so many business fail to plan is that, creating the plan is only half the battle. A plan must be implemented – and sustained. Often the focus in as SME is short term, on paying the bills rather than on creating a plan for longer term growth. When things are quiet, there is more time to plan, but being quiet can have an impact on cashflow so the plan tends to look at this, immediate, problem rather than any further ahead. Then the plan starts to have an effect, resulting in more business so the short term issues go away, and the plan goes out of the window (until next time!)
The cycle of feast and famine
This process can work but tends to deliver that all too familiar cycle of feast and famine. As a consequence, we have a relatively stable SME economy, but with at the expense of planned, sustainable growth. In other words, I see the issue not as the lack of willingness to plan, it is the lack of commitment to sustainably put the plan into action in the medium and long term.
I said at the top of this article that the Government are committed to supporting and encouraging SME business and there is certainly a good deal of financial support available but I do sometimes wonder if the sustainable growth issue is exacerbated by the way SME business support is funded. Support is very much focused on creating the strategy/plan for growth, but there is little or no support for putting that plan into action. I do sometimes wonder how many of the 75% of businesses that do have a growth plan, have it sitting gathering dust on a shelf! We see success when there is a strong plan, and commitment to implementing that plan in the long term.
Avoid Knee-Jerk Marketing
Digital marketing tools and techniques now available to everyone mean that real sustainable marketing communication is well within the budgets of SMEs. Often they are used in isolation as a knee-jerk to address short term needs, sometimes successfully and other times not so…. Put these tools and techniques to work as part of a structured growth plan and the results can be remarkable. Its a small shift, but one that can have a huge impact. If you are disillusioned with what digital marketing has done for your business, and are committed to planning for real growth, we would love to talk to you.